Seanergy Maritime Holdings Corp (SHIP) 2025 Q2 法說會逐字稿

Thank you for standing by, ladies and gentlemen. Welcome to the Seanergy Maritime Holdings Corp., conference call on the second quarter and first half for the period ended June 30, 2025, financial results. We have with us Mr. Stamatis Tsantanis, Chairman and CEO; and Mr. Stavros Gyftakis, Chief Financial Officer of Seanergy Maritime Holdings Corp. (Operator Instructions)

Please be advised that this conference call is being recorded today, Tuesday, August 5, 2025. The archived webcast of the conference call will soon be made available on the Seanergy website, www.seanergymaritime.com. To access today's presentation and listen to the archived audio file, visit the Seanergy website following the webcast and presentation section under the Investor Relations page.

Please now turn to slide 2 of the presentation. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the second quarter and first half for the periods ended June 30, 2025, earnings release, which is available on the Seanergy website, again, www.seanergymaritime.com.

I would now like to turn the conference over to one of your speakers today, the Chairman and CEO of the company, Mr. Stamatis Tsantanis. Please go ahead, sir.

Thank you, operator, and welcome, everyone. Today, we're going to be presenting Seanergy's financial results and company updates for the second quarter of 2025.

Slide 3 -- after a seasonal slowdown, the Capesize market rebounded meaningfully in the second quarter. The Baltic Capesize Index averaged $18,700, a significant increase from the first quarter's average of $13,000, demonstrating the market's resilience despite macroeconomic uncertainty. Looking ahead, we're confident the Capesize market remains fundamentally strong. The historically low Capesize newbuilding order book, coupled with increasing Atlantic basin shipments of iron ore and bauxite, are expected to continue supporting the Capesize charter rates.

Turning to our financial performance in the second quarter, Seanergy recorded a net income of $2.9 million on net revenues of $37.5 million, a significant improvement from first-quarter figures driven by a stronger daily time charter equivalent. With a portion of our fleet already hedged at profitable levels, we anticipate further improvement in our financial performance as we transition into the seasonally stronger second half of the year.

On the fleet development front, we closed the quarter with 21 Capesize vessels. Over the first six months of 2025, we continue to grow our platform with high-quality Capesize acquisitions that enhance our earnings power and scale. In that context, we took delivery of two newly acquired vessels, a Capesize and a Newcastlemax, both of which are already trading under index-linked time charters.

We also continued to streamline our financial position. Since the beginning of the year, we have successfully completed financing and refinancing transactions, totaling approximately $110.6 million, effectively addressing loan maturities until the second quarter of 2026. This enhanced financial flexibility allows us to return capital to our shareholders while also retaining our capacity to pursue attractive growth opportunities.

Overall, since 2020, we have grown our fleet by 97% in deadweight terms while maintaining a disciplined fleet loan to value ratio of approximately 50%. Reflecting both the positive direction of the Capesize market and our healthy balance sheet, our Board of Directors has declared a discretionary cash dividend of $0.05 per share, in line with our distribution in the first quarter. As the market conditions continue to improve, we remain optimistic about the potential to further enhance shareholder returns in the final two quarters of the year.

Using this as a segue, we can turn into slide 4, where we emphasize our long-term commitment to capital return strategy. Slide 4 -- since Q4 2029 (sic - see slide 4, "Q4 2021"), we have returned approximately $89 million to our shareholders. Our capital return strategy prioritizes dividends with $44.2 million paid in common share cash dividends, an additional $45.2 million in share repurchases. We continue to actively assess share repurchases as well as part of our dynamic capital return approach.

Slide number 5, commercial snapshot. Moving on to slide number 5 now, which provides a brief overview of our commercial performance, during the second quarter of 2025, our fleet achieved an average time charter equivalent of approximately $19,800 per day. For the first six months of the year, the corresponding figure stood at $16,700 per day. In both instances, our performance exceeded the average levels of the Baltic Capesize Index for the respective periods.

Our commercial strategy is designed to balance upside potential with stability. By employing index-linked charters, we captured the market strength in June. Simultaneously, fixed rate coverage for part of our fleet mitigates downside risk, providing earning stability. Looking ahead in the third quarter, we have already fixed about 62% of our operating days at a gross rate of $22,400 a day, and we expect to earn a time charter equivalent approximately $23,100 a day for the whole quarter based on the prevailing FFA rates for the remaining of the period. That being said, we know that the Capesize freight market is in backwardation, hence, future earnings might end up being higher.

As regards the second quarter of the year, seven out of our 21 vessels are fixed at profitable levels of approximately $22,400 a day, providing strong earnings visibility for the second half of the year. We view this profitable rate as supportive for our financial results and cash generation in the final two quarters of the year. Given the backdrop of microeconomic uncertainty that has emerged due to trade policies and general growth uncertainty, we believe that our disciplined and flexible commercial approach offers an appropriate balance between earnings visibility and exposure to market upside.

On that note, I would like to turn the call over to Stavros to continue with slide number 6. Stavros, please go ahead.

Thank you, Stamatis. Welcome to everyone joining us for today's earnings call.

Let's begin with slide 6, where we will review the key highlights of our financial performance for the second quarter and the six-month period ended June 30, 2025. We are pleased to report a return to profitability in the second quarter, capitalizing on the upward momentum in the Capesize market, particularly in June, as Stamatis mentioned earlier.

Our net revenue for the quarter reached $37.5 million, compared to $43.1 million during the same period last year. Adjusted EBITDA rose to $18.3 million, which, while approximately $10 million lower than last year's figure, it highlights our ability to navigate a volatile market environment effectively. Our net income and adjusted net income for the quarter reached $2.9 million and $3.8 million, respectively, translating to earnings per share of $0.18.

For the first six months of 2025, net revenue totaled $61.7 million, with adjusted EBITDA of $26.3 million, below the levels recorded in the same period last year, reflecting the softer freight environment for most of the first half of the year. Consequently, we reported a net loss of $4 million for the six-month period. Nevertheless, considering the improving fundamentals and the recent positive momentum in the Capesize segment, we remain cautiously optimistic about achieving profitability for the full year. Notably, despite the challenges, we generated positive operating cash flow of $16.2 million during the first half of the year.

Turning to our balance sheet, our cash position at the end of the quarter was $25.4 million, or approximately $1.2 million per vessel. This was accomplished even as we continued regular dividend distributions, scheduled debt repayments, completed the acquisition of two additional vessels, and an extensive drydock program that saw three ships being drydocked in the second quarter alone and five in the first half of the year.

At the close of the second quarter, our outstanding debt, including finance lease liabilities, stood at $312 million. This translates into a debt-to-capital ratio marginally above 50%, based on the total book value of assets, of $598 million. Finally, as of June 30, 2025, total shareholders' equity reached $258 million, demonstrating the resilience of our capital structure.

Let's now turn to slide 7 to discuss our profitability performance. Our robust commercial strategy, including our hedging activities through FFA conversions, once again enabled us to outperform the Capesize market. In the second quarter, our time charter equivalent stood at $19,800. For the first half of the year, our TCE reached $16,700, surpassing the Baltic Capesize Index by 6%.

Our adjusted EBITDA for the first half of the year totaled $26.3 million. While this figure is lower year over year, reflecting the softer freight market conditions early in 2025, we are encouraged by the resilience of our cash flow profile, with our cash flow margin standing at 26%. Our adjusted EBITDA margin once again exceeded 40%, underscoring the operational efficiency of our platform. It is important to note that these results were achieved despite approximately 150 off-hire days for vessel drydockings, which naturally reflect on earnings.

On the cost front, we successfully maintained daily OpEx per vessel below $7,000, in line with the previous-year performance, despite the inflationary pressures. Now, looking ahead, we remain optimistic about our profitability trajectory in the second half of the year. We believe our ongoing investment in our fleet, coupled with our operational efficiency and dynamic hedging strategy, position us well to continue delivering good results.

Moving now to slide 8, let me provide an overview of our capital structure and financing activities. Our outstanding debt, including finance lease liabilities, at the end of the second quarter was $312 million. Based on the market value of our fleet as of the end of the second quarter, this equates to a loan-to-fleet-value ratio slightly below 50%. Our debt per vessel stands at roughly $14.9 million, nearly $15 million less than the average market value of our ships.

Lastly, approximately 70% of our debt is covered by the scrap value of our fleet, which has an average age of 14.1 years. With cash reserves of $25.4 million, or $1.2 million per vessel, we can effectively manage our financial obligations while being able to support gradual fleet renewal through selective vessel acquisitions.

Regarding our financing activities, we have been particularly active the first six months of the year, executing transactions totaling around $111 million. Earlier this year, we concluded a $54 million sustainability-linked loan to part-finance the acquisition of the Meiship Newcastlemax, next to the refinancing of the Worldship and the Honorship, and two sailing leaseback agreements totaling $34.5 million, addressing the balloon payments under the loans of the Squireship and the Friendship.

Most recently, we agreed on a $22.5 million sale and leaseback transaction with a reputable Japanese owner to finance the purchase obligation for the Blueship, ensuring no impact on our liquidity position. Additionally, Alpha Bank has agreed to reduce the interest rate of the facility secured by the Dukeship by 50 basis points. As a result of these actions, we improved our daily interest costs further within the first six months of the year, reducing the weighted average margin to approximately 2.3%.

Finally, as we move to slide 9, I want to emphasize that Seanergy is strategically positioned to capitalize on any upward momentum in the Capesize market as current dynamics suggest a constructive rate environment in the second half of the year. As Stamatis highlighted earlier, we have already secured 62% of our third-quarter days at an average rate of $22,400, while for the second half of 2025, 33% of our fleet days are hedged at an average rate nearing $22,400. We expect that this strengthened EBITDA outlook will enable us to deliver greater value to shareholders.

That concludes my overview. I will now hand the call back to Stamatis, who will provide insights on the Capesize market and broader industry fundamentals. Stamatis, over to you.

Thank you, Stavros.

Let's look at the demand trends on slide number 10. Capesize ton-mile demand is primarily driven by the growing volume of iron ore and bauxite exports from the Atlantic Basin. The longer routes to the Far East from these regions effectively increase the number of vessels required, the effective number of vessels required, which supports demand. The first six months of 2025, we have seen a 6% increase in shipments originating from the Atlantic.

Expansion has provided meaningful support to Capesize demand, even against the backdrop of heightened macroeconomic uncertainty. More specifically, bauxite shipments from Guinea loaded on Capes rose by more than 30% year on year, while iron ore Cape loadings originating in Brazil and Canada were approximately 4.5% up.

Looking ahead to the remaining of 2025, it was encouraging to note the recent reaffirmation of full-year production and shipment targets by the major iron ore producers, which implies that shipments during the second half of the year will exceed those of the first half. The rebound in trade volumes that has taken place since June, including a record-breaking month for the Australian iron ore shipments, further strengthens our conviction for a stronger second half.

When focusing on long-term picture beyond the current year, the sustained growth in the Atlantic exports is projected to continue mainly through the expansion of Vale's SD11 (sic - S11D) iron ore mining project in Brazil and Rio Tinto's Simandou mine in Guinea that is expected to start exports in late 2025.

Lastly, end user demand for both steel and aluminum seems resilient despite short-term fluctuations in economic conditions as both are used extensively in manufacturing and construction. Currently, steel demand remains supported by industrial and manufacturing activity, even during the real estate weakness in China, which seems very encouraging and bodes well for the future.

Slide number 11, the supply side. The supply side, we believe, is a key driver for a bullish outlook. The Capesize order book is historically low at about 9% of the existing fleet. Meanwhile, approximately 7% of the fleet is 20 years or older and becoming less competitive due to stricter environmental regulations.

To discuss the current situation, only 20 vessels have been delivered in the first six months of 2025, and based on the delivery schedule for the rest of the year, the full-year figure is likely to mark one of the lowest Capesize delivery years in a long, long time. At the same time, only 20 newbuilding orders have been placed in the year, also placing us on track for one of the lowest ordering years on record.

Lastly, as regards the future supply dynamics, it is evident that newbuilding activity remains muted, as current vessel prices and long-term charter rates do not justify new investments. As a result, the combination of the above factors, demand and supply, points to highly constrained Capesize fleet growth over the next few years. As vessel demand remains resilient against this favorable supply backdrop, we believe that the charter rates for the Capesize vessels are likely to remain at very profitable levels for the next years.

To conclude, Seanergy is optimally positioned to benefit from the positive long-term story of the Capesize market. Our strategy remains centered on delivering shareholder value through disciplined capital returns and selective fleet growth, aimed at generating strong returns on capital. With our strong position, we are ready to capitalize on rising rates and further enhance shareholder returns.

On that note, I would like to turn the call over to the operator to open the floor for your questions. Operator, please take the call. Thank you.

(Operator Instructions) Mark Reichman, Noble Capital Markets.

Thank you for taking my question. First question is, coal imports in China have declined pretty significantly from 2024. And I was just curious, why is the Capesize segment of the dry bulk market showing resilience with regards to China?

Well, good morning, and thank you for your question. Indeed, we have seen a slightly decrease in the volumes of coal coming into China, but that has been more than compensated by higher iron ore, as well as bauxite. So long-haul bauxite from West Africa, as well as increased shipments of iron ore, have more than compensated for the slight reduction of the coal shipments.

Okay. And then the second question is, you have really done a great job managing the fleet, outperforming the Baltic Capesize Index. Could you talk a little bit about your strategy going forward? I mean, do you expect to continue to lock up rates? And how much of your fleet would you expect to leave open?

Well, the answer is yes. We will continue locking in when we feel the opportunity is there. It's very dynamic. It can range between 25% to 75% of the fleet, depending on the circumstances. So when we see big jumps in the future rates, the forward rates, then we will go ahead and lock some ships that can potentially be locked. And at the same time, we manage not only the cash flows, but also the ships that are on drydock. And as we have discussed over the call, it's a very heavy drydock year for us, so we have to juggle among all these things.

Okay. And then just the last question, it's kind of a normal one. And I may have missed it if you've already addressed it. But what are your expectations on the operational off-hire days in the third and the fourth quarter?

I will let Stavros answer that because he's more on these numbers.

Sure. Hi, Mark. Good to speak to you. So we had around 150 to 160 days off-hire due to drydockings in the first half of the year. On the second half, we have, in total, six vessels going into drydock, the last two in December. So I don't expect this to affect a lot the available days. So expect around 90 to 110, 120 off-hire days for drydockings in the second half. Half of it is going to be in this quarter and around 60 to 70 days in the fourth quarter.

Okay. Great. Thank you very much.

Thank you, Mark.

Tate Sullivan, Maxim Group.

Hi. Good to hear from you. Great job locking in right here in backwardation. And then I had a question on the bauxite. I mean, it's great growth from the exports from West Africa. Is it a larger percent of your fleet transporting bauxite? Or do you think it will still be a relatively small portion of total cargo moved to your fleet going forward?

Hello, Tate. Good morning. The answer is no. It's pretty much balanced. We are, if I can say, around 40% iron ore, and then we have another 40% coal and about 20% is bauxite. That's pretty much how it looks like. But that changes quarter and quarter. Right now, it is pretty much as I just told you.

Okay, great. And then you had a lot of good examples of reducing your spread to SOFR with your financing. And you've talked fairly consistently about more available financing. Do you think there's still even more available financing today compared to last year for yourself in the shipping sector or about the same dynamic compared to last year?

Hi, Tate. There's still lots of available financing alternatives, and we see interest from many lenders, both from existing and from new ones. One, I wouldn't say exactly restrictive factor, but something that has changed is basically the outlook on Chinese sail and leasebacks following the USTR. But we expect more clarity on that front.

For the time being, I mean, we're happy with the exposure that we have on Chinese lessors. We're not thinking of refinancing them. At the end of the day, Capes coal much less US ports than the remaining sectors within dry bulk. So to answer your question, the interest is still there, and we have a number of alternatives when considering to finance or refinance our vessels.

Thank you. And last for me, I have not asked before, but I mean, periodically there's oversupply in the Panamax market and maybe some cargoes, some shorter-length cargoes going into China from the Panamax fleet. Does that limit the potential upside in Capesize rates? Or is there any change in that dynamic between Panamax rates and Capesize rates this coming year -- this year, do you think?

Well, the answer is yes, indeed. We are seeing Panamax strength which, as you know, has jumped from $8,000, $9,000 in the beginning of the year or even lower to around $13,000, $14,000 recently. And that 50% increase in Panamax, Kamsarmax has, of course, helped the Capesize rates as well, because it's not really cannibalizing cargoes from the Capesize fleet.

That may be even stronger later in Q3. It remains to be seen. We expect to see how the trade discussions will go between the US and China, because that will play a significant role in our opinion as to how the trade flows will go and what kind of normalizations we will see. But given the fact that we have all these trade barriers, the volumes continue to be quite strong.

Liam Burke, B. Riley.

Good morning, Stamatis. Good morning, Stavros. How are you today?

Morning, Liam. Nice to hear from you.

Stamatis, you look at the supply dynamic, which is obviously well, well in your favor, being a Capesize pure play. But we're looking at an aging fleet, a very, very low order book, how does that -- do you see any opportunity in the SMP market to continue to grow the fleet?

Well, that's actually a very, very good point. Indeed, the fleet is aging and there are limited sell and purchase opportunities right now in the secondhand market. However, we're doing our best to identify and lock in new tonnage. But indeed, the universe has decreased a lot on quality purchases in the secondhand market. And certainly, it has become way more expensive.

So that would -- I mean, and the newbuild market just doesn't make any sense either, I presume.

No, not really. Unless there are certain criteria in the newbuilding market that may facilitate commercial and financing, how do you say it, structured products. Otherwise, it will be difficult.

Stavros, real quickly on operating cash flow. I know you had year-over-year decline in -- tough comps on a year-over-year basis for the first half in terms of operating income. But is there anything in the cash flows that were affecting the operating cash flow beyond that? Or is it just timing of working capital?

No, it's mainly timing of working capital. I mean, okay, you start from a lower top line in any case. But it's basically timing of working capital and it's also the payments for the drydockings that are affecting the cash flow in this year. So otherwise, it's pretty much similar to last year.

Great. Thank you, Stavros. Thank you, Stamatis.

Thank you, Liam.

Kristoffer Barth Skeie, Arctic Securities.

Hi, guys. Thank you for taking my question. Can you explain the dynamic with this Simandou mine and also the bauxite volumes out of Guinea and sort of how much of the tonnage should we expect that this ties up with incremental volume increase given transshipments and the infrastructure in Guinea?

I believe, first of all, about Simandou that we will start seeing ramping up later in this year. So it has not started yet. But the expectation is that Q3, Q4, we will see certain ramping up, which means that Simandou is going to go off online, and we'll start to see the first shipment.

Another point I want to make, which is quite significant for the future demand of raw materials, is the new dam in China. I mean, people tend to underplay the new construction of the Medong Hydropower Station, which is going to be one of the largest man-made projects on earth. And that is going to require massive amounts of steel and, of course, iron ore, coking coal and all that. So we expect demand to increase significantly from China, given the weak housing market. So that is going to drive demand in the next few years quite a lot, together, of course, with the ramping up.

Okay. Thank you, guys. That's it from me.

Thank you. Nice to hear from you.

(Operator Instructions) There are no further questions at this time. This does conclude today's conference call. Thank you for participating, and you may now disconnect.